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UPDATE: On September 24, 2003 the European Parliament passed an ammended version of the Software Patent Directive. Please visit the Software Patent Reading Room provided by IP Justice for more news coverage. On September 24, 2003 the European Parliament is scheduled to vote on a directive that will force EU nations to accept software patents and threaten the right to innovate. If this legislation passes:
Read on to find out what is at stake and what you can do to protect the right to innovate. Introduction: Competitiveness at Risk On September 24, 2003 the European Parliament will debate a the Software Patent Directive, a bill that will force member nations to issue and accept patents granted for software and some business methods. This software patent legislation threatens to harm the competitiveness of the European Union, destroy small and medium-sized software firms, decrease creativity and innovation in software, and hinder Free and Open Source software development. However, it is not too late to defeat this directive; voting on the legislation has already been delayed twice by consumer protests. Current Patent Law in Europe: A Fair Balance in Danger Patents issued in the European Union are regulated by the European Patent Convention of 1973. Article 52 of the EPC specifies what can be patented. It specifically states that "schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers" can not be patented. The proposed Software Patent Directive threatens to remove this clear guideline. Patents in the EU may be granted in one of two ways. An inventor can apply to each national patent office, or the inventor can apply to the European Patent Office and receive a single "European Patent" valid in all nations that signed the EPC. The European Patent Office opened in 1978 with 19 member nations. Since then it has expanded to 27 member nations with several more in the application process. It is an independent organization that receives its funding directly from patent application and renewal fees. A European Patent granted by the EPO has the same legal standing as any national patent and is enforced by the individual nationals. Additionally, a patent issued by the EPO can be declared invalid by a national court. Over time the EPO has begun to issue patents for broader claims than are permitted by the EPC. Some worry that this is related to the fact that the EPO is funded entirely by the fees it receives for patent applications: the more patents that can be applied for, the more funding the EPO receives. There is also a problem of underpaid and overworked individual examiners who don't have the time or knowledge to investigate all patent claims. Regardless, the EPO has been issuing some types of software patents since 1998 despite Article 52 specifically forbidding the practice. For example, in 2002 the US firm OpenMarket was granted patent EP 803105 which effectively covers any type of purchase online using a third-party credit card company. There is much doubt that many of these patents could withstand national court challenges. Since different nations have taken different approaches to interpreting Article 52, some have called for the "harmonization" of laws across the EU. US Patent Law: Software Patents Spreading from US to Europe Recent changes in US patent law have given rise to European debate about software patents. The US Patent Office initially avoided issuing any patent claims that involved the use of a computer. In 1981 the US Supreme Court ruled in Diamond v. Diehr that the mere use of a computer did not automatically invalidate a patent claim. The patent in question used a computer to control the heating of rubber in an industrial process and covered the entire process (not just the software used in the computer). Through the 80's various lower courts attempted to define what computer processes could be patented. They created confusing definitions and individual patents were granted or denied based on the wording of the claims. In the 1992 the US Federal Circuit Court stated in Arrhythmia Research Technology v. Corazonix Corp that a patent could be granted on any computer software that manipulated "real-world" data and was not a pure mathematical algorithm. This ruling was confirmed by the Circuit Court in 1994 with their decision in In Re Alappat. In 1996 the Federal Circuit opinion was written into guidelines distributed to patent examiners. While the intent was to eliminate improper patents, almost the exact opposite effect has happened. An estimated 30,000 software and business method patents were issued by the USPO between 1996 and 2001. In 1998 the US Court of Appeals for the Federal Circuit validated business-model patents in State Street Bank v. Signature Financial Group. The infamous Amazon.com "One-Click Shopping" patent (#5,960,411) was issued during this period, as well as countless other inappropriate, obvious, or non-novel patents. Software patents have been strongly opposed in the United States by many groups ranging from academics to economists to Free and Open Source software advocates. There is currently little sign that the patent situation in the United States will soon improve. Large corporations such as Microsoft and IBM have developed large patent portfolios in order to both defend their markets and to give them leverage when negotiating for access to other patents. Smaller firms have complained that they can be hit with lawsuits at any moment for relatively obvious features that they developed independently. Firms of all sizes can fall victim to patents that were not found in a patent search, or were pending at the time when a product was released. Some estimate that up to 20% of software R&D budgets are now spent patenting features instead of developing new systems and software. Software patenting has become so pervasive that IBM actually holds a patent on a software system used by developers while coding to track features that IBM may patent later. Recent Changes in Europe: Big Business Trying to Spread Software Patents The issue of software patents in Europe was first raised in 1997 when the European Commission published a green paper entitled "Promoting Innovation Through Patents." No action was taken until November of 2000 when the EPO proposed a revision of the EPC to specifically allow software patents. Action on this proposal was delayed to allow for economic studies to be conducted and for a public hearing to be held. A vote by the European Parliament was initially scheduled for June of 2003, but it was postponed until September 1, 2003 amidst growing criticism. The September 1 vote was again postponed due to consumer protests. The Business Software Alliance, a US trade group largely headed by Microsoft, has been aggressively lobbying to expand intellectual property restrictions in Europe, under the guise of "harmonizing" laws across the EU. In fact, the BSA may have provided the first draft (also see authorship commentary) of the new EU directive. The new directive will remove the restriction in EPC Article 52 on software patents. The proposed legislation specifically states that "Member States shall ensure that a computer-implemented invention is patentable...." The text attempts to make narrow exceptions to allow reverse-engineering for software compatibility purposes, but these exceptions have not been tested in practice nor in court. The Costs of Software Patents: Less Innovation, Fewer Options, Lower Productivity Restricting intellectual property rights by allowing software patents in Europe will have many drawbacks. A leading group of economists (from universities including the University of London, Stanford, UC Berkeley, University of Paris, and University of Sussex) published a letter stating that software patents in Europe will "have serious detrimental effects on European innovation, growth, and competitiveness." The patent system was designed to provide a reward for innovation and thus to encourage R&D. It must balance the need to encourage creation and the need to allow consumption and subsequent improvement of an invention. The patent system may work reasonably well in "traditional" manufacturing industries. However, it is entirely unsuited for the software industry for several reasons. First, patents in "traditional" industries are issued for a specific implementation of a process or product, whereas software patents issued in the United States have often been for a feature regardless of how it is implemented. Secondly, any useful software product is likely to require many generic sub-steps to work properly. These may be patented by any number of companies. Developing a new software product may require owning or licensing hundreds of patents. The time spent searching, negotiating, and licensing could be better spent on development. For example, a word processor may contain screen display functions, a way to save a file to disk, a spell-checking system, etc. Each of those functions can be further divided into sub-steps such as searching a dictionary for the spelling of a word, presenting a user with spelling options, and remembering frequent spelling mistakes. According to the proposed EU law, each of those sub-steps may be individually patented. If a small software developer independently creates any of these features for a completely separate application (such as a web page development tool) then he risks for a patent infringement lawsuit from any of hundreds of large patent-holding corporations. Some of the basic technologies of the Web may be at risk if software patent legislation is further endorsed. Software is already regulated by copyright laws. Even without patents it may be illegal for a developer to re-publish unlicensed code. Copyright law already rewards software developers for their creation without stifling future innovation. The Better Alternative: Keep the European Patent System Free of Software Patents The European Parliament should reject the current proposal to impose software patents on all member nations. This is by far the most important step for Europe. Furthermore, the EPO should stop issuing European Patents for software. This can be implemented by national courts overturning software patents issued by the EPO and by the enforcement of the terms of the EPC. Stopping software patents in Europe will allow Europe to remain competitive and grow economically. First, join IP Justice. IP Justice is a nonprofit organization that works to protect the public's interest in intellectual property laws. Your membership will allow IP Justice to succeed in its mission of promoting balanced intellectual property laws and defending civil liberties. Visit the Software Patents Reading Room provided by IP Justice to learn more about software patents in Europe and the United States. This collection of resources will provide more information you can use to help stop software patents in Europe. Participate in events that are part of the Action Week Against EU Software Patent Plans. Be sure to sign the EuroLinux petition opposing the Software Patent Directive. Over 250,000 signatures have already been collected. This petition has been cited in many media outlets as a major cause for the delay in voting. You don't have to be a Linux user to sign the petition. If you are an EU resident, contact your MEPs and let them know your opinion about the dangers of software patents. Be polite and stay on topic. Your letter or fax will let them know that their constituents care about protecting Intellectual Property rights. Subscribe to the IP Justice newsletter to stay updated with up-to-the-minute news on Software Patents and other breaking Intellectual Property rights stories. Use the form on the left side of the page to sign up. Link to this page and the EuroLinux petition from your web site. Consumers must learn from each other since the major media is not covering software patents. Look into local groups opposed to software patents in Europe:
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